Why would a company choose Chapter 11 bankruptcy filing?

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Why would a company choose Chapter 11 bankruptcy filing?

Most publicly-held companies will file under Chapter 11 rather than Chapter 7 because they can still run their business and better control the bankruptcy process. Chapter 11 provides a process for rehabilitating the company’s faltering business. Sometimes the company successfully works out a plan to return to profitability; sometimes, in the end, it liquidates.

Under a Chapter 11 reorganization, a company usually keeps doing business and its stock and bonds may continue to trade in our securities markets.

(Reviewed 11.10.08)

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